| zhao3gold said: What is the issue with MS shipped so many? They already earned the money from this shipment, didn't they? Is that bad for a manufacturer to ship goods as many as possible? If you want to judge if MS overshipped, wait till April when they release FY2012 Q3 report. |
Sometimes yes, because overshipping means that there is a lot of stock out there and retailers don't need to restock that frequently, which means that a lot of money has to be saved to be able to maintain the company, rather than being able to spend the income in further investements, I don't know about MS in particular but lets assume we have Company X.
Company X is shipping all its products once a year on July 13th, they get for all their products 12 mio. dollars, to mentain their business they have to spend 750,000 $ a month, the rest of the money will be invested or cashed out to the owners as profits which means that they have a balance of pretty much 0 after one year, now it turns out that their products wheren't as popular as they were predicted to be and a lot of retailers still have enough stock to go for another 6 months without restocking, so the retailers will only buy products worth 6 mio. dollars, which means that the company has to use previous investements to finance their next year. (This is a pretty simple example of a company (which has the worst market strategy I have ever seen) but you could use it for every company out there which has no direct distribution to the customer if you make the time between shipments shorter)
